Fight all your debt woes with the right investment options. Yes, you can invest even when you’re in debt. Read on to know more.
Financial security is all we keep aiming for. Switching jobs, looking for the best offers, constantly working on our skill sets, etc. are all basically ways to strengthen the foundation of our financial stability. Opening only a Savings Account is not going to help improve your situation. If you really want a happy, secure future ahead, you need to make better efforts towards achieving it.
Additional Reading: 5 Investment Ideas That Can Help You Create Wealth In 2018
Like any of your favourite video games, the game of securing your financial future also comes in different levels/stages. If you’re a beginner, opening a Recurring Deposit sounds like the perfect start.
If you’ve been in this game for quite some time, it’s time you step up to the next level. What’s that? Investments, duh! The best and the safest way to invest the right way is by opening a Fixed Deposit. It’s a tried and tested investment option. Apart from that, you could also think about investing in the stock market.
What’s stopping you from investing to secure your financial future? Oh, you’re worried about that pile of debt you’re already under? Sure, it can be frustrating, but you know what the good news is? There are ways to invest even if you’re in debt. We’ll tell you how.
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Payments First. Investment Second.
Paying your debt off and also trying to invest could be a little difficult. It’s like trying to juggle too many balls at the same time. Bottom line, the plan is bound to fail if you don’t execute it well enough.
Start by making your minimum payments first. Not doing that first might mean a higher interest, late fees and penalties. In case you didn’t know, this process could also affect your Credit Score (not in a good way).
Investing while you’re still in debt isn’t a bad idea. All you need to do is ensure that you keep enough money aside for your investment schemes and still have enough left to make those minimum payments on your debt.
Additional Reading: Stuck In Debt? Here’s How To Get Out Of It!
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Higher Interest, Higher Priority.
This is the golden rule. Whether it’s Credit Card debt or other loans, you have to start paying off the one that has the highest interest rate. Unless you’re sure about being able to manage these high-interest debts, it’s advisable to not invest.
Once the situation is under control, you’re free to invest in the instrument of your choice. But when it comes to Credit Cards, you need to be extra careful with the interest rates. Making just the minimum payment every month is going to make things worse.
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Choose Your Investment Options Wisely
Before investing, you need to do your homework. Just because a particular plan suits your friend’s needs, it doesn’t necessarily mean that it’ll be the best fit for you too.
Depending on factors like the rate of interest, the timelines etc., you can decide when and where to invest. If you have enough financial bandwidth you can think about investing in some long-term plans. Otherwise, you can also think about investing in some short yet rewarding options like low-cost Mutual Funds.
Additional Reading: 5 Questions To Ask Before Choosing A Mutual Fund
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Click, Click. Done.
Being disciplined and trying to strike a balance between investing and paying off debt isn’t an easy thing to do. You need to grab a calculator and make a few calculations. Before considering investing as an option, you need to know how much you can afford to invest.
Once you’re done making these calculations, it’s action time. You need to set up automatic monthly transfers of money into an investment account and automate your bills as well. This amount needs to be altered as and when required.
For instance, if you make a few extra bucks from somewhere or get promoted, you must increase this amount as well. How does that help? Have you heard about the magic of consistency? That’s the trick here. Automated deductions make it easier for you to plan your money well. Once your financial plans are set, investing becomes a cakewalk.
Investing in the right things (people, relationships and investment instruments) always pays off. All you need to do is—look for these ‘right’ things. No matter how many options you have, choosing the right ones is what does the trick.
Still scared? Want to walk the safer route? Well, a Fixed Deposit is all you need.